Which one of the following is the best example of systematic risk?
A)The price of tomatoes declines sharply.
B)Inflation rises unexpectedly.
C)Commercial airline pilots go on strike.
D)A hurricane hits a tourist destination.
E)People become diet conscious and avoid fast food restaurants.

Question

Quizplus · Accepted Answer

Systematic risk refers to market-wide risks that affect the entire market, such as economic or political factors. Inflation rising unexpectedly affects all industries and companies operating in the economy, making it the best example of systematic risk among the given options. The other options - declining tomato prices (specific to a certain industry), a pilot strike (specific to the airline industry), a hurricane (specific to a geographic area), and consumer behavior (specific to a few industries) - are examples of unsystematic or specific risks.

Which One of the Following Is the Best Example of Systematic